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It’s Time We Give Corporations a Human Rights Scorecard

01.03.2022

Protestors hold signs as they gather during a rally for Uyghur Freedom in New York City in 2021.

Photo: AFP


Several democracies took an important symbolic step by staging a diplomatic boycott of the Beijing Winter Olympics that came to a close on February 20. Dozens of athletes around the world bravely refused to act as pawns of the Chinese Communist Party (CCP) during the games.

Although far from sufficient, these are encouraging signs that there is a growing movement in the democratic world willing to stand up to China’s egregious human rights violations and its efforts to undermine liberal democratic values around the world. Unfortunately, there is a major and influential player that has proven much harder to convince to join these efforts: the corporate world.


The world today has largely embraced free markets. If there is one way in which history “ended,” it was certainly in the way in which totalitarian, centrally planned economies have all but ceased to exist except for less than a handful of stubborn autocracies like North Korea and Cuba.


Most dictatorships, however, learned long ago that their survival depended on them avoiding economic ruin, and thus have taken advantage of free markets and welcomed foreign investment.




CCP Rights Violations


China’s regime is the poster child of this sort of capitalist dictatorship, having expanded its economic power and influence in the world since the CCP started adopting free-market reforms in the 1970s.


At the same time, in the last 10 years alone, the CCP has engaged in some of the most egregious human rights violations in Xinjiang, crushed any remnant of autonomy and democracy in Hong Kong, built a monstrous surveillance state, and centralized even more power in the hands of party leader Xi Jinping. And they are not stopping there.


The CCP is trying to shape international institutions in its image, as it buys off or bullies other countries into toeing their line to conform to their interests.


As the CCP is committing genocide against the Uyghurs in Xinjiang, large corporations from free countries are looking the other way as they continue to do business in the region. Major clothing companies have refused to even acknowledge that the cotton in their garments was picked by forced Uyghur labor.



Foreign Capital Fuels the Regime


Entertainment giant Disney filmed a movie in the region and thanked the very local government that is carrying out this horrific crime for their hospitality. BlackRock, the largest investment firm in the world, received approval from the regime to operate mutual funds in China – the first foreign corporation to be allowed to do so – and it is pushing for American investors to dramatically increase their exposure to the Chinese market.


This shamelessness was at its most infamous display last month, as the International Olympic Committee (IOC), backed by millions of dollars in sponsor money from around the world, allowed the Chinese regime to host the Winter Olympics in Beijing.

People calling for a boycott of the 2022 Beijing Winter Olympics due to China’s persecution of Muslim Uyghurs in front of the Chinese Consulate in Los Angeles in November 2021. Photo: Frederic J. Brown/AFP via Getty


None of the CCP abuses or even the recent disappearance of Chinese tennis player and Olympian Peng Shuai seem to have deterred the IOC from taking the sponsorship money and allowing the greatest sports washing event in history to take place.


There is a lot more the democratic world must do about China’s human rights abuses. But none of this will matter much if foreign capital continues to empower the regime.



Corporations Must Be Held Accountable


In order for this to stop, we must start by creating a reliable and systematic way in which we can grade corporations in their comxmitment to respecting basic human rights and democratic values.


Not partnering with a government carrying out genocide, or not helping a dictatorship build a massive surveillance system are among the lowest bars we should expect companies operating from the comforts of countries where rule of law and free speech are respected to clear.


Today, the only efforts made to rate corporations in how they perform beyond their bottom lines take the form of Environmental, Social, and Governance (ESG) ratings. ESGs, however, rely on flawed methodology and dilute such important issues into one scorecard to the point that they make some of them meaningless, especially human rights.

In other words, not only are there issues with how data is reported and the independence of the rating agencies, but companies can get away with glowing reviews by improving their environmental impact, even while they do business with some of the worst human rights abusers in the world.

How is it possible that Tesla can receive such high ESG ratings while it opens a showroom in Xinjiang? How can Dell claim to be “making strides” in its social impact in the world, while it is helping the CCP build its massive surveillance state? How can BlackRock offer ESG rated funds that have massive exposure to the Chinese state?


Evaluate Company Ratings

This is not to say that companies’ efforts to curb global warming, the reason many of these companies get favorable ESG ratings, are not welcome. They are. But this should not be used as cover for companies as they collaborate with human rights abusers. The S in ESG needs to be dropped if human rights are not going to be at the top of the agenda.

Providing consumers and investors an independent, systematic rating of companies and their commitment to human rights will empower people to effect meaningful change around the world.

Autocrats from Saudi Arabia to China have abandoned most ideological burdens to embrace an evil and Machiavellian pragmatism: they have put markets, and free people’s capital, to work into solidifying their autocratic rule and crushing civil society in their countries.

If we are serious about promoting democracy and showing solidarity with oppressed peoples around the world, we need to go after the oppressors’ bottom line.

One of the most important steps to do this is to identify the companies that enable dictators and ensure that respect for human rights becomes the first and most important hurdle to clear when deciding on an investment.



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